what is insurance for bank deposits?

Dear Friends,
Do you know there is insurance coverage for your money in the bank, the amount could me savings account money or deposits.

Deposits up to Rs 1 lakh are insured under the government's Deposit Insurance and Credit Guarantee Corporation (DICGC).

As per this scheme, even if you keep multiple deposits (savings and fixed deposits) across branches of one bank, only a total of Rs 1 lakh is insured.

However, spreading your money across two-three banks helps. "This way you can get the maximum coverage on your deposits", Chabria.

There is another good news. The government is in talks with the RBI to raise the ceiling on deposit insurance from the present Rs 1 lakh to Rs 2 lakh.

Smart tips

Hazari has some tips for the safety of your money:

-- Stay away from banks that offer you a comparatively higher interest rate on FDs than other banks. This is known as 'adverse selection' in banking terms. “They would offer higher rates only because they need funds," he adds.

-- Beware of banks that have grown too fast, too quick.

Despite the rumors that have been doing the rounds, Chabria brings in assurance by saying," Depositors in India are extremely well protected. Even if a bank goes bust, the RBI should take care of it, and the investors may suffer, not the depositors."